The primary reason to establish a customer-dedicated warehouse is to:

The primary reason to establish a customer-dedicated warehouse is to position inventory to improve response time because:

Proximity to Customers: A customer-dedicated warehouse is typically located closer to the key customers, reducing the lead time for deliveries and improving the overall response time.

Enhanced Service Levels: By having inventory strategically positioned near customers, companies can offer higher service levels through quicker order fulfillment and faster delivery times.

Customization: Such warehouses can be tailored to specific customer needs, holding customized inventory that caters to the unique demands of those customers.

Competitive Advantage: Faster response times and better service can provide a competitive advantage, leading to increased customer satisfaction and retention.

Integrating and consolidating inventory (Option A), balancing inventory with consumption (Option C), and equalizing logistics costs (Option D) are important but secondary benefits. The primary driver is the improvement in response time to meet customer demands more effectively.

References

"Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies" by David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi.

"The Warehouse Management Handbook" by James A. Tompkins and Jerry D. Smith.